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Upstream Source Systems and Transformation Layer

General Ledger and Financial Applications

Reporting Data Warehouse Planning and Calculation Engines

Downstream Reporting Capabilities

Differences in the accounting treatment between current accounting standards and IFRS will create a need for new input data.

Differences in the accounting treatment between current accounting standards and IFRS will likely drive changes to General Ledger design, Chart of Accounts, as well as sub-ledgers and feeds.

IFRS has much more extensive disclosure requirements, requiring regular reporting and usage of financial data that may not be standardized in current data models.

The differences that arise in the accounting treatment between current accounting standards and IFRS will create a need for changes in reporting.

Data and transactions that are captured, stored and ultimately sent to the financial systems may not have all the needed attributes or qualities.

Multinational companies may ultimately realize a need to re-develop General Ledger platforms or additional sets of books to ensure compliance with multiple financial reporting requirements.

Increased need for documented assumptions, sensitivity analyses, potential factors that could affect future development may expand the scope of information managed by financial systems.

Assumption changes from period to period can introduce significant volatility and require detailed support for derivation and rationale for changes, requiring design of additional reports.

Sub ledgers within the ERP may have additional functionality to support IFRS which is currently not being utilized, but which could be implemented.

Multi-ledger accounting functionality within newer releases of ERP’s may be considered for long-term solutions.

Reporting warehouse feeds to calculation engines may need to be adjusted in a standardized way to support reporting processes.

External reporting templates will likely require revisions to reflect IFRS requirements.

Transformation Layer not likely to have been designed with IFRS in mind; data sender/ receiver structures may need to be adjusted.

Changes to IFRS will likely necessitate redesigned accounting, reporting, consolidation, and reconciliation processes, which may impact configurations of the financial applications.

Data governance functions and Meta Data Repositories (potentially including Data Dictionary, ETL & Business Intelligence Tools) may need to be adjusted to reflect revised data model.

Increased disclosures such as sensitivity tests and roll- forwards may require additional ad hoc query capabilities.

Over time the potential for acquisitions of companies using IFRS will increase; altering source systems and Extract, Transform and Load (ETL) tools to provide all needed data elements will make integrations significantly more efficient.

Differences that arise in accounting treatment between current accounting standards.

Current valuation systems may not have functionality to handle IFRS requirements.

Potential Technology Impacts

What Now?

Two Approaches

Generally speaking, two approaches to IFRS conversion predominate: all-in and tiered. The former is characterized by a relatively short timeframe; simultaneous conversion of all reporting entities; dedicated project teams; and devotion of significant resources. The latter is conducted over a more extended period with phased conversion of reporting entities, at least some personnel retaining of their “day job” duties, and a spreading out of project costs.

When the European Union converted to IFRS in 2005, it was, for most companies, an all-in effort driven by the tight timelines imposed by the European regulators. Without the luxury of time to convert on a staggered basis, most companies were forced to rush through the process, leading to inevitable inefficiencies and ineffectiveness.

A tiered approach – staged, rational, and measured – to IFRS conversion may be the best approach for consumer products companies. This comes with a seemingly self-contradictory caveat: You’ll have to act fast if you want to go slow. That is, if you want to reap the benefits of phasing in your conversion, you’ll need to start planning soon.

Companies that choose a tiered strategy can stagger their conversions on a country-by-country or region-by-region basis. As each group moves through the stages (see graphic, “A Tiered Approach to IFRS Conversion”), the processes developed and lessons learned are applied to the next group. Many companies will choose Canada for the first conversion, given its 2011 mandate for conversion.

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